IRS on a rampage as nearly one in three HNW individuals audited

The Internal Revenue Service in 2011 audited 29.93 percent of taxpayers who reported more than $10 million of income, according to statistics released today. That's up from an audit rate of 18.38 percent in 2010 and 10.60 in 2009. Overall, the agency's rate of audits for individual taxpayers stayed constant at 1.11 percent. The statistics cover audits conducted in fiscal year 2011, which generally corresponds to tax returns filed during 2010. For U.S. taxpayers with adjusted gross incomes between $5 million and $10 million, the audit rate rose to 20.75 percent from 11.55 percent. People making between $200,000 and $500,000 were audited at a 2.66 percent rate. In 2009, the IRS created a special unit to examine the tax returns of high-wealth individuals. “We will take a unified look at the entire web of business entities controlled by a high-wealth individual, which will enable us to better assess the risk such arrangements pose to tax compliance and the integrity of our tax system,” IRS Commissioner Douglas Shulman said in a December 2009 speech. “We want to better understand the entire economic picture of the enterprise controlled by the wealthy individual and to assess the tax compliance of that overall enterprise.” --Bloomberg News --